Insurers ready to back battery storage sector despite concerns over failures: GCube
Despite concerns over the frequency of failures in the global Battery Energy Storage Systems (BESS) market, insurers are increasingly ready to support the sector, a new report reveals.
The report, titled “Batteries Not Excluded: Getting the insurance market on board with BESS,” produced by GCube, a leading underwriter of renewable energy projects, highlights insurers’ optimism tempered by the need for effective risk management.
Key findings from the report indicate that over 50% of BESS failures occur within the first two years of operation, with a significant increase in failures since 2016.
Additionally, 5-50 MWh BESS account for over half of total failure events globally, with 48% of failures linked to solar-plus-storage projects.
Despite these challenges, insurers recognise the importance of the BESS sector in the energy transition and are willing to support its growth.
GCube expects BESS assets to represent 30% of its underwritten renewables portfolio by 2024.
However, concerns remain regarding thermal runaway risks, public safety liabilities, and transit and cargo challenges. These risks underscore the importance of enhanced data and insights for effective risk management.
To address these challenges and secure sustainable insurance coverage, the report emphasises measures such as ensuring sufficient spacing between battery modules, conducting comprehensive root cause analyses, and involving Original Equipment Manufacturers (OEMs) throughout the project lifecycle.
Fraser McLachlan, Founder & CEO of GCube, highlighted the importance of learning from past failures and prioritising data-driven insights to ensure sustainable growth in the sector.
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